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It’s a Wonderful World…

We have this theory in the Western world whereby we remunerate the most able handsomely and give them titles and everything, and then we listen carefully to that which they spout.

It’s a good theory, but like the Camel, there were too many vested interests on the design committee, and it is riven with flaws that only become apparent when you test drive it.

The Bank of England keep a tame Fabian tethered in the back yard, they roll him out whenever they think they might be under attack for their er, ahem, right wing views. He is carefully groomed and then paraded at the front of the serried ranks of Friedman economists that inhabit those corridors.

Washed, brushed, and wearing his best collar and lead, Adam Posen, for it is he, appeared the other day to tell us that the trouble with banks is that they only lend to people they think are going to pay them back.

Voila! He has the perfect cure for this – he wants to set up a bank that will lend to anybody who needs money – the very thing to stimulate the market!

Mr Posen thinks the real danger lies with the flagging economy, which he thinks will not recover unless more is done.

As well as keeping interest rates at a record low of 0.5% since March 2009, the Bank has previously tried to boost growth by injecting £200bn into the economy in the form of quantitative easing (QE).

Adam Posen said the Bank should resume this, with another £50bn of gilt purchases over the next three months.

Hmmn, and like Bennie of Crossroads fame, there are serious problems between the ears on this one. Who is going to buy the £50bn – assuming that anybody does? Only the man, or sovereign state, with £50bn in the bank – that’s who. So we take a (relatively) real £50bn out of circulation and give it to the government who promptly give it to those people who the wicked bankers think are in the class of ‘least likely to’ repay the debt? I can see where this idea might be popular…but I can’t for the life of me see how it could possibly be a cure for the debt deficit.

Over in Eurozone land (Yeah! It’s Saturday and we still have a Eurozone – whodathoughtit?) the design committee came up with a ‘family’ of wildly disparate members, ranging from Great Aunt Italy with her secretive kleptomaniac ways, Uncle Greece, the lazy beach lizard with the gold medallion and the too tight bathing shorts, Uncle Germany, the hard working industrialist with his numerous savings accounts, and the foster child, Great Britain, loudly proclaiming that she wasn’t really part of this family, was only here for the free beer, and they weren’t her parents anyway. So far so good.

Then t’committee proclaimed that everybody had to chip in to pay everybody else’s debts. Bedlam, they have been fighting like ferrets in a sack ever since to ensure that whatever else happened, it wasn’t ‘they’ who had to put their hands in their pockets. The mystery to me is that anybody ever thought this dysfunctional family could work things out. The Socialist, Angela Merkel, was last heard whinging on behalf of Uncle Germany ‘please don’t mention collectivism’. Priceless.

Very nearly as good as the Guardian complaining about Operation Weeting being expanded to include their role in coming by information they weren’t supposed to have…

Here in the real Eurozone land, I watch pensioners who once received near 150 Euros for their £100 British State pension, now lucky to get 106 Euros, gathering winter fuel in the forests. They are lucky enough to live in a ‘hot climate’ so apparently don’t qualify for the winter fuel allowance to see them through the -10 degree nights. They swap recipes for Potimarron soup, and remember the days before the English shop went bust, when they could afford a pack of Walls Wiltshire sausages. They are the living exponent of the European dream.

I watch them from my perch in the local Routiers. Not the most clement of places to take your morning coffee, sited on the side of the busy Route National 7 carrying heavy goods down to the Mediterranean; it fascinates me though. Since early April I have been watching a procession of low loaders, from a variety of different companies, carrying a white plastic wrapped cargo. Most of them have British number plates.

At first I thought it was just coincidence that two or three of these Lorries should pass by at the same time of day each time I was there. Then I discovered that actually there were 15 or 20 such cargoes each and every day. I make that roughly 3,000 of them.

Every day, except Sunday, for the past five months they have trundled south.

Shrink wrapped super yachts. Massive ones. Heading for the sybaritic lifestyle of the marinas of southern France. Destined for a life of Pimm’s and indolence. Probably the best part of three quarters of a million quid each – hence the shrink wrapping. Can’t risk the grubby fingerprint of a humble tax payer marring their gleaming perfection.

Somebody is buying them. Somebody is paying for them to wend their way down the RN7.

If times grow harder, they may find a use for we tax payers….

{15 comments }

outsiderSeptember 17, 2011 at 18:07

Correction: There are no open Friedmanites at the Bank , probably never have been. And Posen is not a Fabian. He is one of an old network of academic/central bank economists that include Mervyn King and Charles Bean (the influential Dep Gov) over here and in America Ben Bernanke (the intellectual leader) and Frederick Mishkin ( who stood down from the Fed after it was revealed that he had written a glowing, paid-for financial report on Iceland not long before it imploded).

They all adhere to a sort of souped- up neo-classical economic theory, enshrined in their banks’ computer models. Among other things, it requires that after a crash you should have negative real bond rates (ie low interest rates, creating lots of money and more inflation) to restore economic equilibrium. Otherwise you will fall into decades of falling prices and no growth, as in Japan.

What they do not allow for, unfortunately is that the “equilibrium” they are trying to restore was unsustainable and everyone in the real world – consumers, businesses and banks -is perfectly well aware of that and will act accordingly. Hence their increasing desperation to make the model work.

CascadianSeptember 17, 2011 at 17:41

Hmmm…….so many questions.

So what is happening with the shrink-wrapped boats?

Are they merely owned by sensible weekend sailors that have made the calculation of marine fuel usage vs transport cost and decided that there are savings to be made? Additionally are they avoiding a potential uncomfortable crossing of the Bay of Biscay.

Have they sniffed the wind and decided that at a time when talk of mansion taxes and 50p tax rates it is better to avoid the appearance of conspicuous consumption.

Have they made the calculation of potential winter fuel costs and exhorbitant moorage fees and decided that an extended live-aboard in the sunny south to avoid a British winter could actually save money?

Or have they given up on the yUK economy and gone “Galt”

And exactly what is a “Routier”?

Enquiring minds need to know.

ChâtelaineSeptember 17, 2011 at 22:59

A “Routier” is a road [national or departmental] restaurant/hotel/bar basically for truckers only. They’re generally quite desolate places, serving enormous portions of relatively good cheap food & hosting interesting people to observe for us other mortals

CascadianSeptember 18, 2011 at 19:41

Basically a “caff” then, thank you, my education continues.

I am so glad that Ms Raccoon is not cavorting with the wikipedia definition- “routiers were English mercenaries associated with free companies who terrorized the French countryside” . But, then again-no, forget it.

John wSeptember 17, 2011 at 16:46

Adam Posen is American.

Also, he did say he would resign if he is wrong. It’s not really him who’s the problem, it’s the other 8 idiots. They just got rid of Sentance, the only sensible guy, and even the other two who wanted to increase the BOE rate have changed their minds again.

AntisthenesSeptember 17, 2011 at 14:25

“he wants to set up a bank that will lend to anybody who needs money”.

Already tried it it was called sub-prime mortgages another lefty initiative that got us into deep s*§t. One think about the left they do not let a bad idea go to waste. Full marks for perseverance no marks for common sense.

MichaelSeptember 17, 2011 at 13:48

Before I left Banking to enjoy the daily risk of assault, theft and death (I am now a Teacher) one of the important questions we asked when considering a loan application was “Can they pay it back?” Lending massive amounts of money to those unable to repay it was one of the contributory factors in causing the “Credit Crunch”. Before I left the Bank, I even dealt with customers who claimed it was “My Yooman Rite Innit” to have a loan they clearly could not afford. I rather think our “Tame Fabian” needs to be taken into a quiet, darkened room until this “idea” goes away. As the late Ronald Reagan put it “it is not that they are ignorant, they just know so much that just isn’t so”.TTFN

Gildas the MonkSeptember 17, 2011 at 11:42

Bennie from Crossroads was my style guru.Also, I would quite like to drink coffee in the Routiers thingy It sounds nice.G the M

SaulSeptember 17, 2011 at 10:05

British workers in the EU can also claim child benefit for their kids back home.

Elena ‘andcartSeptember 17, 2011 at 08:48

I got 498 Euros last month. Perhaps it was a good exchange rate day.Thank God for the Sell by Date cabinet in my local supermarket is all I can say. Although I have to point out that half priced Smoked Salmon is not really sound economic value.

As for gathering winter fuel. I do a lot of that, but at least it keeps me fit.

davidbSeptember 17, 2011 at 08:40

If the boats are made in the UK its a good thing they are being exported, so dont knock it.

Whats the deal with pensions and the like abroad? If foreigners can come to the UK and get free everything and a stipend too, does the same not apply to our people in the rest of the EU? Can they not claim the French equivalent of UK welfare? Is it less generous? We are told they get better pensions abroad.

davidb,The French are not as daft as the British!They only pay welfare to those who have paid into the system. Or genuine registered asylum seekers.In fact the British who retire to non-EU countries don’t’ EVER get any pension increase – their pensions are frozen at the rate in force on the day they went to live with their son or daughter in South Africa or Canada, wherever.

Joe PublicSeptember 17, 2011 at 11:27

“The French are not as daft as the British!”

Aye. Le French set up their immigrants’ camp as far from the immigrant’s points-of-entry into France, but as close to England as they could, to facilitate Channel-crossing attempts.

2MacSeptember 17, 2011 at 09:38

Ah! The joys of Labour’s Legacy in the benefits system.

EU Migrant workers who come to the UK to work or sign on automatically receive Child Benefit & Child Tax Credit for their children living back in Poland, Romania or whereever in the EU they live. A nice little earner especially if you then share a flat with many others and work for cash. The child has never been in the UK. may not even exist.

A particularly popular scheme in the Pakistani Community in the north of England is to have 4 wives, and upto 10 kids. Register each wife as a single mum with kids as she is not married in the infidel register of marriages and therefore single.=Claim Housing Benefit, Council Tax Benefit to cover your housing costs. £200 a week or more if you can rent from your uncle at higher rent.

Collect money via post office account registered in wives names from your family friend in the post office and then start work for your cousins taxi firm while your wife works in a local shop all for cash.

A friendly doctor can also sign one of your wives on disability, and another then claims a carers allowance but this only happens in about 25% of cases.Pakistani children are also registered with a disability due to inbreeding providing carers allowance and disability payments in at least 20% of population.

Figures correct as of September 2011.

2MacSeptember 17, 2011 at 09:49

I did not mean to specifically single out Pakistanis, it is also done by anyone who can have upto 4 wives but their is not that many Mormons in Manchester